Development News Edition
Give Feedback

Govt to pump Rs 42,000 cr in state-run banks


Devdiscourse News Desk new delhi Last Updated at 26-11-2018 20:27:46 IST India
Govt to pump Rs 42,000 cr in state-run banks
  • (Image Credit: Twitter)

The government will pump Rs 42,000 crore into debt-laden public sector banks in the remainder of the current financial year to March to improve their financial health, a senior Finance Ministry official said on Monday.

"We will infuse the next tranche of recapitalisation in public sector banks by mid-December. About Rs 42,000 crore remains to be infused as capital in the banks in the current financial year," the official said.

The Rs 42,000 crore capital infusion is part of the Rs 2.11 lakh crore, two-year, front-loaded bank recapitalisation plan announced by the government in October 2017 to support credit growth.

While recapitalisation of banks will be based on regulatory capital requirement and also on the need to fuel growth, large banks like State Bank of India (SBI) and PNB are less likely to get any additional infusion this fiscal year to March.

The government is going ahead with the remaining capital infusion plan despite the Reserve Bank of India (RBI) extending the deadline for meeting the Basel III norms by a year.

On November 19, keeping the capital adequacy ratio for banks unchanged at 9 per cent, the RBI extended the deadline to meet Basel III norms from March 2019 to March 2020 in order to increase the current lending capacity of banks.

Further, the official said four to five public sector banks, whose NPAs have gone down and current account-savings account ratios (CASA) have improved, may come out of the RBI's prompt corrective action (PCA) framework.

Currently, 11 banks with high bad debts are under the PCA framework that prohibits them from further lending. On the insistence of the central government, the RBI's Board for Financial Supervision is expected to meet soon on the issue.

The government's Rs 2.11 lakh crore recapitalisation was to be funded through the sale of bonds worth Rs 1.35 lakh crore, budgetary provisions of Rs 18,139 crore and Rs 58,000 crore from the market by diluting the government's equity share.

Of the Rs 1.35 lakh crore, the government has already recapitalised banks with Rs 82,000 crore. In July, it infused Rs 11,336 crore in five banks - Punjab National Bank, Allahabad Bank, Andhra Bank, Indian Overseas Bank and Corporation Bank.

(With inputs from agencies.)


add banner

LEAVE COMMENT